Returns are one of Amazon’s and their third-party sellers’ biggest challenges to selling products online. It was reported that 30% of all products ordered online are returned. Traditional brick and mortar stores have never experienced a return flux as we see with e-commerce, reporting only 8.89% of all products being returned. The main culprit behind high online returns: free return shipping.
Unlike past times, returning products has become easier than ever. Specifically when you look into marketplace giants like Amazon, which guarantee free returns and shipping for most of their products, returning a product is as easy as putting the item in a box and dropping it off at a post office.
These online return policies are still evolving and changing today. In 2017, Amazon released a new type of online return, returnless refunds. Returnless refunds allow customers to get 100% refunds without having to ever return their products. You read that right. With this policy, customers can report any product to be defective, receive a full refund, and get to keep the product after. The topic of returnless refunds has been a huge debate topic among Amazon sellers. With this latest controversy with returnless refunds, here are 5 things every seller needs to know about this policy.
What is a Returnless Refund on Amazon?
Returnless refunds are given to customers who request refunds for their purchases but are not required to return the product. Returnless refunds allow sellers to quickly resolve product issues such as defects or purchasing errors. In normal circumstances, refunds can take up to 3-5 business days and require customers to bring back the product in question.
On Amazon, returnless refunds are an optional feature for Amazon third-party sellers. In some cases, returnless refunds may be cheaper than shipping the returned item back. Sellers may opt into the returnless refund policy to save on return shipping costs, even if it means losing a product unit.
For more information on Amazon’s Return Policies.
Pros of Returnless Refunds for Amazon Sellers
You may be wondering why any sane Amazon seller or online merchant would agree to returnless refunds. Returnless refunds mean sellers could lose dozens if not hundreds of products by customers submitting a simple return claim. In some ways, that’s true, it doesn’t make economic sense to “give away” free products. But in many cases, returnless refunds provide tons of benefits that outweigh the cost of a “free” product.
1. Returnless refunds can save sellers money from return shipping:
Return shipping is really expensive. For Amazon sellers, the cost to ship a product to a buyer can cost between $2 to $140. If you’re selling a cheaper product (less than $10), it can be more expensive to ship the product back to Amazon. Not to mention, if a product is truly defective, returning the product is pointless since you won’t be able to resell a defective product. So you could potentially lose the product and pay an extra cost to ship it back to Amazon, By removing product returns, you might lose the product, but it’ll save the cost of shipping the product back.
2. Better customer relationships:
Defective or poor products can be extremely frustrating for a customer. The last thing they want is to fight tooth and nail for a refund. Returnless refunds allow customers to get refunds faster and reduces the points of friction that can hurt your business. The customer no longer has to worry about packaging and shipping the product back. and will receive a refund in 1-2 business days, which is a lot faster than typical refunds. The faster and easier the return, the more likely the customer will come back and purchase from you in the future. In an article by Invesp, 92% of consumers will repurchase a product if the returns are easy.
3. Good publicity:
If you can improve the customer’s experience during the return process, they might tell their friends and colleagues about your product and brand. Although it didn’t work out with this first product, the customer understands that you will provide them a safety net. The customer will feel a lot more secure if they needed a refund. Word of mouth is great publicity, and returnless return policies can drive a lot of it.
4. Saves time and resources:
When Amazon released its returnless refund policy, they claimed it was a highly supported and request feature by Amazon sellers. Returns can be extremely expensive, and the cost of fulling traditional returns can be detrimental to small businesses and sellers. There are products that cannot be resold. One example is beauty products, which when returned, cannot be resold due to health and safety protocols. When these products get returned, they typically get disposed of or destroyed. Essentially, sellers are paying to return a product they can no longer profit from. Returnless refunds are a cost-effective measure for sellers to cut their losses and save the time and resources that would have been wasted on fulfilling returns.
Dealing with Bad Actors
While returnless refunds can be beneficial to sellers, others have disapproved of Amazon’s returnless refund policy since its release. In 2017, many small businesses and Amazon sellers voiced their concerns about the new refund policy, claiming it could set a bad precedent for future returns. One of the biggest concerns around the policy was that it may encourage bad actors and potentially scammers from buying products on Amazon. These bad actors can claim a false return due to defects or unsatisfaction, then get a full refund and keep a free product,
If you are worried about these bad actors taking advantage of the returnless refund policy, there are a couple of tools and troubleshooting solutions to protect your business and products. For starters, Amazon monitors the amount of refunds request by any buyer account. Accounts with excessive returns may be suspended by Amazon. Secondly, sellers can choose specific products for returnless refunds. If a product is too valuable and can be resold, you can decide to opt out of a returnless refund for that particular product.
Opting In for Amazon Returnless Refunds
There are two methods of opting into returnless refunds,
The first method is by setting Returnless Refund rules.
1. Go to your Amazon Seller Central account and head to “Return Settings” located in your Settings menu
2. Click “Returnless Refund” and then click “Add New Rule”
3. In the rules, set a price range for products you want to opt-in for Returnless Refunds (you may also select specific product categories or specific reasons for return)
4. Click “Save”
Now your products are ready. Any product within the price range (and within the category/reason for return if applied) will be eligible for Returnless Refunds.
The second method is through setting Returnless Refunds for specific products and SKUs (stock-keeping units).
1. Go to your Amazon Seller Central account and head to “Return Settings” located in your Settings menu
2. Click on “Return Attribute Overrides” and download the template
3. Follow all the instructions on the template.
4. In the template, enter the code “RETURNLESS_REFUND” in the “prepaid label exemption code” box
5. Upload the completed template into the Return Attribute Overrides page
With that, the products you listed in your template will now be eligible for Returnless Refunds.
Picking Your Returnless Products
If you need help picking products for the refund policy, here are some key questions you need to ask before opting in:
1. Can the product be resold?
2. How much does it cost to return the product compared to the profits of reselling the product?
3. How does the returnless refund policy impact my inventory?
By asking yourself these questions, it determines the cost-effectiveness of opting into returnless refunds. Products that cannot be resold or if the profits do not cover the cost of the return, it might be worth using returnless refunds. And lastly, some sellers won’t have the capacity to give away “free products.” The reality is that products cost a lot of money. If your business is tight on resources, you might not be able to lose any products. Whether it may be, ask yourself these questions and determine the best solution for your Amazon business.
Looking Forward to What’s Next
We understand returnless refunds are not for everyone. Some sellers and businesses might not see the added benefits or cannot afford to lose a product. But for some sellers, returnless refund policies can be a lifesaver. Not only can sellers save costs by not paying for return shipping, but it can also provide a lot of relief for their customers. With faster and easier refunds with less friction, it might even convince customers to come back or better yet, promote your products to their network.
Depending on your business needs and practices, it might make sense to opt into returnless refunds. The best next step is to review your products and understand the potential cost of returning products. How much does return shipping cost? Can my products be resold? If not, does it make sense for me to pay for return shipping? Or should I just save costs and let my customers keep return products? No one knows but you, the business owner. If it makes economic sense to opt-in, returnless refunds might help your business in the long run.
